- You must report any inheritance you receive or expect to receive to ODSP.
- An inheritance is generally treated as income in the month you receive it, and what is left the next month is generally treated as an asset.
- A trust may keep part or all of an inheritance from counting as an asset for ODSP, but a recipient cannot put their own inheritance into an absolute discretionary (Henson) trust to avoid the $100,000 limit.
Getting an inheritance can be good news and stressful news at the same time if you receive the Ontario Disability Support Program (ODSP). You may worry that the money will reduce or end your benefits, and you may be tempted to spend it quickly to avoid that.
This article explains how ODSP generally treats an inheritance, what the asset limits are, and how a trust may change the picture. Caseworkers apply the rules case by case and the rules can change, so confirm your own situation before you spend or move any money.
You must report an inheritance, even one you only expect
ODSP recipients must report any inheritance they receive or expect to receive. That includes an inheritance that has not yet been paid out, for example while an estate is still being settled.
Reporting early matters. Waiting until after the money arrives, or after you have spent it, can make it harder to explain what happened and what is left.
How the money is counted: income first, then assets
An inheritance is generally treated as income in the month it is received, and any amount left the following month is generally treated as an asset.
The asset limits are $40,000 for a single person and $50,000 for a couple, plus $500 for each dependant other than a spouse. If the money you keep pushes you over the limit that applies to you, your eligibility can be affected.
| Household | Asset limit |
|---|---|
| Single person | $40,000 |
| Couple | $50,000 |
| Each dependant other than a spouse | Add $500 |
These figures come from ODSP policy and can change, so check the current amounts with your caseworker.
Spending the money: what is and is not covered here
People often ask for a list of approved expenses. Whether a particular purchase is acceptable, and how ODSP treats it, depends on your circumstances and on how your caseworker applies the policy. Do not assume that spending quickly solves the problem.
Before you spend a large amount, ask ODSP in writing how that spending will be treated. Keep receipts for everything you buy or pay off, and keep records of the inheritance itself.
Trusts can change how an inheritance is treated
If an ODSP recipient puts an inheritance or life insurance proceeds in a trust, up to $100,000 is exempt as an asset. That $100,000 is a combined limit on the trust capital plus the cash surrender value of any life insurance policies the recipient owns. Recipients may be given up to six months to set up the trust.
A trust where the trustee has absolute and sole discretion over payments is not an asset for ODSP, so its capital can exceed $100,000. However, a recipient cannot put their own inheritance into such a trust to avoid the limit.
Payments from a trust to a recipient for any purpose are exempt as income up to $10,000 in a 12-month period, provided an annual report of all trust transactions is filed. Other payments count as income in the month received.
- A trust left by the person who died may work differently from one you set up with your own inheritance.
- Trust terms matter a great deal, so have a lawyer review them before anything is signed.
- Reporting duties continue after the trust is in place.
What to do next
- Tell ODSP about the inheritance as soon as you know about it.
- Ask the estate trustee when and how much you will receive.
- Do not make large purchases or transfers until you know how ODSP will treat them.
- Ask a lawyer whether a trust is available and what it would cost you in benefits and flexibility.
- Keep copies of letters, receipts and bank records.
Frequently asked questions
Do I have to tell ODSP about an inheritance I have not received yet?
Yes. ODSP recipients must report any inheritance they receive or expect to receive. Reporting early gives you time to plan.
Will an inheritance be counted as income?
Generally it is treated as income in the month you receive it, and any amount left the following month is generally treated as an asset. How this applies to you depends on your situation.
Can I put my inheritance in a trust to protect it?
Up to $100,000 placed in a trust may be exempt as an asset, within a combined limit that includes the cash surrender value of life insurance policies you own. A recipient cannot put their own inheritance into an absolute discretionary trust to avoid the limit.
Can I just spend the money before ODSP finds out?
That is risky. You must report an inheritance you receive or expect to receive. Talk to your caseworker or a lawyer before spending a large amount.
Sources
- ODSP Policy Directive 4.1 – Definition and treatment of assets — ontario.ca
- Ontario.ca – ODSP eligibility for income support — ontario.ca
- ODSP Policy Directive 4.7 – Funds held in trust — ontario.ca
Links go to official government, court and regulator pages. The law changes — confirm you are reading the current version.
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